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Drink to Life, to Life - to Israeli Wines!

December 15, 2005 By:
Frank Rosci, JE Feature
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The making, drinking and sharing of wine is an ancient Jewish tradition, a familiar family custom.

As one of the world's oldest sources of wine, and with very good to excellent world-class products to promote, Israeli vintners may be getting closer to bringing more of their delicious appellations to U.S. markets.

But, first, they must overcome several well-intentioned but limiting marketing regimens that require repositioning their wines in the United States. And they must address general misconceptions about their products. A number of Israeli vintners may soon be working with marketing experts here to decide on the best new strategies to follow.

However, certain obstacles must be overcome to help make that happen, says Rob Mann, guest speaker at a function dealing with Israeli wines recently sponsored by the local branch of the America-Israel Chamber of Commerce, held in Center City. Mann is director of consulting and strategy, The Wharton Global Consulting Practicum, The Wharton School, University of Pennsylvania.

"One of the greatest obstacles I see [is] breaking perceptions that kosher equals Israeli and Israeli equals kosher - since this is driving shelf-space constraints here in the U.S., at least for table wines," he reasons.

"Also, Israeli winemakers must act as a united, organized industry so 'all boats float as the collective water rises.' "

At present, not all of the wineries work together, Mann points out.

"This is linked to establishing a fine wine positioning in the U.S. to be supported by a distributor. The other major consideration to be addressed is competition for mindshare, particularly among key urban populations where purchases of Israeli wines can thrive," Mann explains.

Some movement on that end could happen quickly, Mann acknowledges. "I think there are 'low hanging fruit efforts' [shorter, quicker ways] that can be taken vs. multi-year efforts. I believe, for example, that [Israel's] existing tourism infrastructure can support the robust launch of Israeli wine tours in a few months, if not shorter. This could result in a nice increase in sales to U.S. and other consumers through the 'back door' - selling more at the wineries themselves," he says.

Medium- and longer-term efforts to redefine the Israeli identity could take a few years, but there are distributors, Mann continues, "who are prepared to provide 'turnkey' support for Israeli wines - effectively accelerating market penetration, potentially nationwide."

Currently, a few distributors, including Royal Wines Corporation, in Bayonne, N.J., dominate the distribution of certain kosher wines from Israel, Mann says.

Luring Israeli winemakers to expand their U.S. presence has its roots in "The 2005 Israeli Wine Export Conference: How to Sell Israeli Wines Successfully in the U.S.," held in Tel Aviv this past summer.

The conference was sponsored by the New York City law firm of Nixon Peabody LLP, and organized by the firm's Vince O'Brien, a veteran wine industry attorney, and Mitch Shelowitz, the firm's Israeli business team leader.

Try It - You'll Like It!
According to Shelowitz, "If Israeli wines are sold as either Mediterranean or Israeli, and had their own shelf - just as wines from Australia, New Zealand, Chile, Argentina and other countries - away from the kosher wines marketed to Jewish, religious consumers, then the stigma or inhibitor created by the word kosher wouldn't deter people."

And then, he adds, "Israeli wines would win greater acceptance by the wine-drinking public at large, which is very interested in and open to trying new wines."

The impetus to change how Israeli wines are marketed and displayed is being led, says Shelowitz, by experts in Israel, New York and Australia, including Golan Heights Wineries and its subsidiary Yarden, Inc., as well as by Nixon Peabody and Wharton.

Based on VinExpo 2004, the international wine and spirits exhibition created by the Bordeaux Chamber of Commerce, Bordeaux, France, in 1981, the size of the current total U.S. wine market is approximately $16 billion, of which wine imports, currently at $4 billion to $5 billion, represent the high-growth area.

Says Mann: "My sense, based on Israeli sources, is that Israeli exports to the U.S., not including direct sales to U.S. tourists in Israel, ranges between $7 and $10 million - perhaps a bit more - a year. So, Israel's share of imports to the U.S. is very, very small.

"But this needs to be viewed in terms of production capacities as well. Many of the 150 Israeli wineries, focused on fine wine, have very limited capacity."

What that probably means is that the Israeli wine industry is unlikely to have the mega-growth enjoyed by other so-called "New World" regions, that include Australia, Chile and South Africa - countries with wine products against which Israeli wines compete but on a small scale. "However, these are the relatively high-growth nationalities that have 'paved the way' for smaller countries by opening the 'New World' macro-segment. In this regard, the growth of the 'New World' producers benefits competitors mutually," says Mann.

Adds Shelowitz, "Many non-Jewish, non-kosher people, who would otherwise be interested in sampling New World wines, won't give wines on kosher shelves a second look, let alone a taste."

To help showcase Israeli products in the Philadelphia area, the America-Israel Chamber of Commerce features various Israeli wines at its functions, says Debbie Buchwald, the chamber's executive director.

"It is the chamber's policy to set an example for the community by ensuring that Israeli wine is served at our events. This helps to raise awareness with businesses, organizations and individuals about the large and diverse selection of wines from Israel.

"It also helps to educate caterers about the availability of Israeli wines and their procurement," she concludes.

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